Purse & Co. Lofts Redevelopment Project City Center TIF District

(Lamar Corridor/West End Sub-District)

Economic Development Committee

May 20, 2013

Purpose

Provide background information on City Center TIF District

and recent District amendments

Review the Purse & Co. Lofts Redevelopment Project

Obtain Economic Development Committee’s approval for

consideration of the project by City Council on June 12, 2013

Originally created in 1996 with a budget

of $87,567,717 and term of 15 years

Originally created to develop an

attractive, sustainable urban core and

reimburse costs of public improvements

and redevelopment of vacant or

underutilized buildings downtown

District was amended December 2012 to:

Adjust District’s Boundary

Extend Term of District

Increase District’s Budget

Decrease City Participation Rate

Establish Other Taxing Jurisdiction

Participation Rates

City Center TIF District Background

City Center TIF District Amendments

Boundary Adjustment (Creation of two Sub-districts)

City Center Sub-district –

original district boundary (green

dashed line)

Lamar Corridor/West End Sub-

district – approximately 27 acres;

encompasses properties along

the Lamar Corridor and properties

in the Historic West End area (lavender dashed line)

Term Extension

City Center Sub-district –

12/31/2012 to 12/31/2022 (10 yrs)

Lamar Corridor/West End Sub-

district – 12/31/2012 to

12/31/2037 (25 year term)

City Center TIF District Amendments (Continued)

City Participation Rate

City Center Sub-district – Decreased from 90% to 80% during extended

term

Lamar Corridor/West End Sub-district – Established at 90% for 25 year

term

Other Taxing Jurisdictions Participation Rates

Dallas County

City Center Sub-district – 53% for 5 years

Lamar Corridor/West End – 53% for 20 years

DISD, DCCCD and DCHD – will not participate in District

City Center TIF District Amendments (Continued)

District Budget Amendment

The District’s budget increased

from $87.6M to $152M

The increased budget:

Provides a source of funding

to stimulate redevelopment

of the Lamar Corridor and

Historic West End area

Provides a source of funding

to accomplish

recommendations of the

Downtown Dallas 360 Area

Plan, that wouldn’t otherwise

be funded

Provides a source of funding

to fill in redevelopment gaps

in the downtown core

Category Estimated TIF

Expenditure*

Original City Center TIF Collections** $75,696,253

Public Infrastructure Improvements Streetscape

Improvements, Pedestrian Linkages, Lighting, Utility Burial,

Utility Upgrades

$8,500,182

Parking $5,500,000

Acquisition & Restoration of Historic Sites $0

Redevelopment/Development Projects Environmental Remediation, Interior & Exterior Demolition,

Façade Improvements/Restoration, TIF Grants

$40,972,111

District Wide Improvements $4,000,000

Affordable Housing $6,500,000

Ground Floor Activation (in the form of a TIF Grant) $8,300,000

Plan Implementation/Administration $2,500,000

Total $151,968,546

*Estimated TIF Expenditure reflects actual project collections for the district.

**Only $75,696,253 will be collected by 2012, the remaining funds have been

reallocated in the budget for the extended term.

City Center TIF District Lamar Corridor/West End Sub-district

Lamar Corridor is a primary connection between key downtown destinations and public

facilities, stretching from the Cedars Area to Victory Park

Infill development along the Lamar Corridor, north of Young St., is vital to create a

contiguous development pattern currently established on Lamar St., south of Young St.

Historic West End area has experienced decline in occupancy rates over the years with

little development/redevelopment activity or momentum

Development on current surface parking lots, and redevelopment of vacant or underutilized

buildings is possible with public investment

Downtown 360 Plan describes this area as:

Underdeveloped with significant gaps in urban fabric

Infill development and improved public realm necessary to solidify connection

between Convention Center and Historic West End area

Corridor should be developed with supporting tourist entertainment to activate the

major gateway

Residential and office development should fill in additional blocks to the east

and west of Lamar St.

City Center TIF District Purse Building

601 Elm Street building constructed 1905

and used by Parlin and Orendorff Implement

Company, who sold agricultural implements

In 1928, Hall & Purse Co. became the main

tenant, and later changed its name to Purse

& Company Wholesale Furniture.

Located in the West End Historic District

Listed on the National Register of Historic

Places

Vacant since early 1990’s when Dallas

County staff relocated

Structural integrity of building has been

compromised by water damage and neglect

c. 1908

c. 1914

c. 1928

Purse & Co. Lofts Project Description

Victory Plaza & Buildings

40 loft apartments with open floor plans, 14’

ceilings

14,440 square feet of retail space that can

accommodate 5 concepts

Restaurant for county employees and tourists

Specialty shop serving prepared foods

Basement speakeasy reminiscent of the 60’s

Rooftop restaurant with downtown views

Coffee and wine bar opening to the light rail

station

Project Cost: $14,867,948

Project Start Date: December 31, 2013

Project Completion Date: July 31, 2015

Purse & Co. Lofts Project Design

On March 22, 2013, Urban Design Peer

Review Panel reviewed the project’s design

and provided recommendations for minor

changes that are reflected in the project’s

design

On May 6, 2013, the Landmark Commission

approved the design of the Purse & Co.

Lofts and issued a Certificate of

Appropriateness

Purse & Co. Lofts Project Funding Sources and Uses

Victory Plaza & Buildings

Funding Source Amount Use

Private Equity $2,539,078 17% Acquisition and Construction

Historic Tax Credits $2,073,922 20% Construction

Construction Loan $10,254,948 69% Construction

Total $14,867,948

Purse & Co. Lofts Proposed TIF Funding

Majority of the TIF funds proposed will reimburse environmental remediation,

demolition, and historic façade restoration

The Purse & Co. Lofts project would not occur, but for TIF funding

TIF Budget – Purse & Co. Lofts

Redevelopment/Development Projects

Environmental Remediation/Abatement $160,000

Demolition $385,500

Historic Façade Restoration (including historic storefront 7 awning) $1,650,000

Total $2,195,500

Public Infrastructure Improvements

Streetscape Improvements $42,500

Utilities $562,000

Total $604,500

Total TIF Funding $2,800,000

Purse & Co. Lofts TIF Board Funding Recommendations

On April 11, 2013 the City Center TIF District Board of Directors

reviewed and approved TIF funding for the Purse & Co. Lofts

redevelopment project in an amount not to exceed $2,800,000.

Purse & Co. Lofts Conditions of TIF Funding

Minimum private investment of $12,000,000 for the Project (acquisition, construction and

construction related soft costs).

The term “Invest” or “Investment” means the sum of all acquisition costs, construction costs

(hard and soft) paid, payable or actually incurred by or on behalf of the Owner, with respect

to the Property and the improvements thereon. Construction related soft costs include the

following items: architecture and engineering, interior design, remediation and demolition.

Carrying or other similar costs shall not be considered toward this definition of project

investment. The owner must provide verification of all expenditures.

Redevelopment of the Project shall include:

Minimum 30,000 square feet of residential space (approximately 32 residential units); and

Minimum 11,800 square feet of retail/restaurant/commercial space.

Obtain a building permit and start construction for the Project by December 31, 2013;

Obtain a Certificate of Occupancy (CO) for the Project by December 31, 2014;

Execute an Operating and Maintenance agreement for public infrastructure improvements

associated with the Project by December 31, 2014, for a period of 20 years;

Purse & Co. Lofts Conditions of TIF Funding (Continued)

Obtain final acceptance of public infrastructure improvements associated with the Project,

as evidenced by the issuance of a Green Tag from the Public Works and Transportation

Department by December 31, 2014 and submit documentation to the Office of Economic

Development (the “OED”);

Mixed Income Housing: A minimum of 10% of the Project’s total residential units must meet

affordable housing standards in accordance with the District’s Mixed Income Housing

Guidelines. These guidelines require, but are not limited to, the following:

Affordable units must be available for a 15 year period (from the date of CO).

If the total number of affordable units drops below 10%, a 90-day compliance period will be

granted, after which the contract may be terminated.

Submit semi-annual reports to the OED Staff (from the date of CO).

Construction of Project improvements and building renovations shall be in general

conformance with design plans approved by the City Center TIF Board of Directors and

Dallas City Council;

A minimum of 25% of the total net leasable square footage of non-residential space, with a

minimum of at least 50% of ground floor space must be occupied prior to TIF Reimbursement;

Purse & Co. Lofts Conditions of TIF Funding (Continued)

The Project shall be managed by a management company acceptable to the Director of the

OED, such approval not being unreasonably withheld;

Owner shall submit to the Director of the OED a quarterly status report for ongoing work on

the project, as well as public improvements. Status reports will be due once every three

months after the Council approval date;

Comply with the Business Inclusion and Development (“BID”) goal of twenty-five percent

(25%) Minority/Women-owned Business Enterprise (M/WBE) participation for TIF

reimbursable improvements, and the Owner shall make a good faith effort to achieve a

goal of 25% certified M/WBE participation for total private improvement construction

expenditures for the Project, and meet all reporting requirements for each;

Market the apartments pursuant to an affirmative fair housing marketing plan approved by

the City;

If necessary, the project deadline can be extended up to 6 months, subject to the Office of

Economic Development Director’s and City Center TIF District Board of Director’s approval;

Strategic Importance of Proposed Project

Project is consistent with Downtown Dallas 360 Area Plan

Strengthens development momentum in the West End

Adds 40 residential units (estimated 60 new residents), including 4

affordable units , increasing downtown residential population,

specifically in the West End

New residents in the area will support current retail and restaurant base

in the West End

Restaurant and retail space in the project will serve residents, workers

and visitors to the Dealey Plaza, Sixth Floor Museum, County Offices

and West End

Recommendation

Staff requests ECO Committee to approve and forward a

recommendation of approval by City Council of a Development

Agreement with Purse Development Company, LLC for TIF

reimbursement not to exceed $2,800,000 for the Purse & Co.

Lofts redevelopment project to be considered at the June 12,

2013 Council meeting.

APPENDICES

Appendix A: Project Requirements/Other Information

Purse & Co. Lofts - Project Facts

Minimum Residential Space (required)

30,000 s.f.

Approx. 32 Units

Minimum Affordable Housing Units (required)

3 Units or

10% of Total Residential Units

Required Private Investment Min. $12,000,000

Expected Total Project Cost $14,867,948

TIF Funding $2,800,000

% TIF funds to total project cost 18.8%

Return on Cost without TIF 4.9%

Return on Cost with TIF 6.0%

Deadline to Obtain Building Permit December 31, 2013

Deadline to Obtain Final CO December 31, 2014

Appendix B: Purse & Co Lofts Development Pro Forma

Purse & Co. Lofts Project Pro Forma

City Center TIF District

PROJECT DESCRIPTION: 601 Elm Street

PROJECT TYPE: Mixed Use (Residential/Commercial)

CONSTRUCTION START DATE: December 31, 2013

PROJECT SCHEDULE: December 31, 2015

Residential Units SF # of Units

Total/Avg 36,780 40

Use Breakdown SF Total Leasable SF

Residential 36,780 51,222

Commercial 14,442

Other 23,202 Total Bldg SF (Gross)

74,424

Project Costs Income

Hard Cost $10,837,177 Residential Revenue $695,142

Soft Cost (less Developer Fee) $2,182,190 Commercial Revenue $361,050

Acquisition $1,848,581 Total Revenue $1,056,192

Total Project Cost (without City $) $14,867,948

Expenses

Total Project Cost $14,867,948 Operating Expense (Residential) ($278,057)

TIF Assistance $2,800,000 Operating Expense (Commercial) ($54,158)

Net Cost to Developer (after TIF reimbursement) $12,067,948 Total Expenses ($332,214)

Return on Cost Analysis NOI $723,978

NOI/Total Project Costs

Return on Cost (without City $) 4.9%

Return on Cost (with City $) 6.0%

Notes: Stabilized rates in 2017; Revenue reflects a residential and

commercial vacancy rate of 10% and 25% respectively

Appendix C: Purse & Co. Lofts Project Development Team

Developer: Purse Development Company, LLC

Todd Smith, Managing Partner

Craig Melde, Managing Partner

Ray Sanders, Partner

Terrence Wagner, Partner

Representative projects completed by development team:

Historic Harlan Building Clearpoint Crossing Apartments

Mixed Use - 22,000 square feet Multifamily - 252 Units

Dallas 2005 Houston 2009

Sheraton Hotel 2004 Main Street

382 Rooms Office 30,000 square feet

Houston 2004 Dallas 1999

Architect: ARCHITEXAS